Insights for lenders
Lenders should always check loan affordability carefully and consider whether extra support is needed for vulnerable customers.
Insights for consumers
Check your budget to see if you can afford to make repayments before taking out a loan.
Wei applies for a loan but struggles to repay it
Wei applied for a loan of $11,000 in September 2024 to help his family. The loan was for five years, with weekly repayments of $74.80.
Wei made the first four repayments on time. He then defaulted on the loan as he had been unable to work due to a traumatic event and was living on a benefit. Most of his income was going toward rent, leaving very little for other expenses. In late November, Wei contacted the lender seeking hardship assistance and asked for his repayments to be deferred.
Should the loan have been approved?
The lender asked for more information to assess Wei’s hardship application. Wei provided some documents but said he could not supply everything requested because of delays in getting medical certificates. During this time, Wei questioned why he had been approved for the loan in the first place, given his financial situation.
In March 2025, Wei complained to FSCL, saying the loan was not affordable.
Wei and the lender disagree on whether the loan is affordable
Wei believed the loan should never have been approved and asked for the entire balance to be written off.
The lender maintained that the loan was affordable based on the information provided at the time of application.
FSCL finds that the loan was unaffordable
We reviewed Wei’s income and expenses using updated household expenditure data. This showed that, at the time he applied for the loan, Wei’s budget was in deficit by more than $500 a month, meaning the loan was unaffordable. We found that the lender had not complied with their responsible lending obligations under the Credit Contracts and Consumer Finance Act 2003.
Finding a fair outcome
We considered what was fair. Wei had received the benefit of the $11,000 loan, so it would not be fair to require the lender to write off the entire amount. The appropriate outcome was for the lender to waive all interest, fees, and charges, and to work with Wei to agree on an affordable repayment plan for the remaining balance.
What was the outcome of FSCL’s investigation?
The lender accepted our decision. They waived interest and fees, and accepted a reasonable repayment plan. The complaint was closed.
